University medical leaders warn of care access risk if clinical joint venture lapses; propose 'All Minnesota Health' investment plan

University of Minnesota medical leaders told the Board of Regents on March 14 that underinvestment in clinical facilities and an expiring joint-venture agreement at the Clinical and Surgery Center (CSC) pose immediate risks to patient access, faculty recruitment and medical education unless a new business arrangement or investment is reached.

Jacob Tolar, vice president for clinical affairs and dean of the Medical School, described an “all Minnesota health” vision that would integrate the university’s people and capabilities to expand access and invest in facilities statewide. “We provide good changes in the healthcare,” Tolar said, while warning that eroding reimbursements and rising costs are pressuring clinical operations.

Physicians and system leaders told regents the CSC — a 50/50 joint venture between University of Minnesota Physicians (UMP) and Fairview Health Services — is the front door to care for many patients. The CSC and associated ambulatory surgery operations handle roughly 500,000 patient visits a year and were described as an important referral hub for the state. The joint-venture agreement is set to end in 2025. The university made an offer on Feb. 28 to acquire Fairview’s half-interest; according to executives, Fairview rejected that offer.

Bevan Yoo, vice dean for clinical affairs and CEO of University of Minnesota Physicians, said the medical practice and the CSC deliver high-quality care despite physical limitations and equipment shortages. “When patients get to us, we deliver great, compassionate, high quality care,” Yoo told the board, but he added that space and equipment constraints limit how many patients the system can treat.

Kathy Bridal (transcript: Kathleen Bendel), vice chair for equity, diversity and inclusion at the Medical School and director of the fellowship program, described the M Health Fairview Masonic Children’s Hospital NICU as a 68‑bed, level‑4 unit that provides statewide services but operates in a 30‑year‑old facility. Bridal said most modern NICUs provide private rooms for infection control and family privacy; the hospital’s current layout forces multiple families and clinicians into shared spaces and limits capacity.

Abraham (Abe) Jacob, chief quality officer for M Health Fairview, described systemwide quality improvements in recent years but said that capacity constraints are limiting further progress and that better facilities would support wider access across rural Minnesota.

Executive Vice President Greg Goldman told regents that Fairview had responded to the university’s bid by citing three issues that were not part of initial negotiations: (1) joint-venture losses on the books that Fairview said should be addressed (Goldman said those losses could be up to about $100 million, pending due diligence); (2) agreement on a model-of-care to preserve referral flows into the CSC; and (3) a UMP vote to approve a single-member structure if the university were to become the sole owner. Goldman said the university is awaiting further response from Fairview and continues to plan for multiple scenarios.

Board members asked how services and training would be affected if the CSC agreement expired with no new deal. Tolar warned of a potential “deletion experiment” in which specialties and high‑margin clinicians could leave if investments and infrastructure are not sustained, and said that some training and research capabilities could be lost permanently.

Regents and presenters discussed options for funding and partnership. The presentation referenced external estimates (cited by university staff) that underinvestment in the clinical enterprise could total roughly $500 million; presenters also said the university’s proposed strategic partnerships could mobilize significant capital without requesting state tax dollars. The administration said the proposed “all Minnesota health” partnerships would bring private investment and operational models intended to upgrade facilities and expand care access statewide, including support for rural sites and clinical training programs.

No formal board vote or contract decision was taken at the meeting; the item was presented as an informational update and to alert regents to the near-term expiration of the joint-venture agreement and the potential need for rapid negotiations or alternative plans to sustain access and training.